2015 -- S 0417

========

LC001285

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

____________

A N   A C T

RELATING TO TAXATION -- CARBON PRICING AND ECONOMIC DEVELOPMENT

INVESTMENT ACT OF 2015

     Introduced By: Senators Felag, Miller, Goldin, Sosnowski, and Goodwin

     Date Introduced: February 25, 2015

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

adding thereto the following chapter:

CHAPTER 70

CARBON PRICING AND REBATE

     44-70-1. Short title. -- This chapter shall be known as the "Carbon Pricing and Economic

Development Investment Act of 2015."

     44-70-2. Definitions. -- The following terms shall have the following meanings for the

purposes of this chapter:

     (1) "Fossil Fuel" means coal, natural gas, and any petroleum product, which is entered

into the state for the purpose of burning to provide mechanical or thermal energy. Fossil fuels do

not include renewable biomass or waste vegetable oil biodiesel.

     (2) "Carbon dioxide equivalent" ("CO2e") means a unit of measure denoting the

equivalent mass of carbon dioxide that produces the same amount of global warming impact as a

certain mass of any greenhouse gas.

     (3) "Carbon price" means the excise tax imposed by this chapter.

     (4) "Clean energy fund" means the fund established under this chapter.

     (5) "Resident" shall have the same meaning as defined in § 31-1-18(b).

     (6) "Employer" means any legal person, state agency, or local government body who has

employees working in the state.

     (7) "Petroleum product" means propane, gasoline, unleaded gasoline, kerosene, number 2

heating oil, diesel fuel, kerosene base jet fuel, and number 4, number 5 and number 6 residual oil

for utility and non-utility uses, and all petroleum derivatives, whether in bond or not, which are

commonly burned to produce heat, power, electricity or motion or which are commonly

processed to produce synthetic gas for burning.

     44-70-3. Carbon pricing. – (a) An excise tax shall be collected on the first point of entry

within the state of all fossil fuels, at the rate specified in subsection (b) of this section.

     (b) The rate in 2016 shall be fifteen dollars ($15.00) per ton of CO2e that would be

released by burning the fuel sold. The rate in every future calendar year shall be the rate in the

previous calendar year plus five (5) real 2015 dollars, as calculated before the beginning of each

calendar year.

     (c) The director of revenue shall calculate and publish the rate in current dollars for each

year, by January 1 of each year.

     (d) In sales where greenhouse gas emissions from the relevant fossil fuels are to be

permanently sequestered and not released into the atmosphere, charges on the relevant fossil fuels

shall be reduced in proportion to the amount of CO2e that is to be sequestered. The office of

energy resources shall ensure that in such cases, the emissions are actually sequestered and not

released into the atmosphere.

     (e) Fees shall also be collected, at the same rate specified in subsection (b) of this section,

on the release of methane or other greenhouse gases due to the transport or usage of fossil fuels,

or due to any industrial process. The office of energy resources shall study such non-combustion

releases of greenhouse gases and adopt rules relating to which entities are liable for fees under

this subsection. The office of energy resources shall also estimate the average amount of CO2e

released in the form of escaped methane due to the extraction or transportation of natural gas

before natural gas enters Rhode Island, and shall add an additional charge to the carbon price on

the first point of entry within the state of all natural gas, based on the rate specified in subsection

(b) of this section.

     (f) The department of revenue and office of energy resources, in consultation as

necessary with other state departments and offices, shall adopt any rules and practices necessary

and expedient to carry out this section, in accordance with chapter 35 of title 42.

     44-70-4. Clean energy fund. – (a) There is hereby created a restricted receipt account in

the general fund to be known as the clean energy fund. Unexpended balances remaining in the

clean energy fund shall not be subject to the ten percent (10%) charge. Unexpended balances and

LC001285 - Page 2 of 5

any earnings thereon shall not revert to the general fund but shall remain solely in the clean

energy fund. The clean energy fund shall be used solely to carry out the provisions of this

chapter, and to help residents and employers transition to cleaner energy options and mitigate any

potential economic harm from the carbon price imposed by this chapter.

     (b) All charges collected under § 44-70-3 shall be deposited in the clean energy fund.

     (c) Proceeds from the clean energy fund may only be used for the purposes described in §

44-70-5. Proceeds shall be available for the purposes described in § 44-70-5 without

appropriation.

     44-70-5. Clean energy fund uses. – (a) The department of revenue may use funds from

the clean energy fund for any of the following options:

     (1) Giving direct dividends to residents and employers of the state, which may be

administered monthly or annually, at the director of revenue's discretion, based on administrative

feasibility and the needs of residents and employers;

     (2) Paying for administrative costs associated with collecting the charges, administering

the clean energy fund, and carrying out the other responsibilities assigned to the office of energy

resources and department of revenue under this chapter, provided that no more than five percent

(5%) of the proceeds in any year may be used for such costs;

     (3) Coordinating and investing in development research, demonstration, and early

commercialization (including the building of testing and demonstration plants, facilities, and

products) of: energy storage technologies; wind or solar technologies that are judged to have the

potential to reduce the cost of wind or solar electricity by at least fifty percent (50%); and/or other

projects that are deemed to be potentially revolutionary breakthroughs in clean energy

technology;

     (4) Funding programs to assist the installation of wind, solar, energy storage, energy

efficiency, or other clean energy technologies at homes or other private or public properties,

including offshore, and especially in low-income residences;

     (5) Contributing funding to a green bank in the state; or

     (6) Investing in public transportation systems.

     (b) One hundred percent (100%) of the proceeds into the clean energy fund each year

must be returned to the state economy through one of the six (6) options in subsection (a) of this

section.

     (c) The director of revenue shall publish a document by December 31 of each year

showing the exact expenditures from the clean energy fund in the past year.

     44-70-6. Preliminary dividends. – (a) To avoid financial harm to households and

LC001285 - Page 3 of 5

businesses due to the carbon price, no later than December 20, 2015, the department of revenue

shall send a "clean energy check" to every resident, equal for every person, in the amount that the

director of revenue estimates the average resident will pay in increased costs due to the carbon

price in the first two (2) months of 2016, and to every employer in an amount proportional to

each employer's share, in full-time equivalent employees, of total state employment, with

employers as a whole receiving a total amount equal to the amount that the director of revenue

estimates that employers as a whole will pay in increased costs due to the carbon price in the first

two (2) months of 2016. The department of revenue shall have the authority to issue bonds to

fund these pre-emptive dividends.

     SECTION 2. This act shall take effect on January 1, 2016.

========

LC001285

========

LC001285 - Page 4 of 5

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- CARBON PRICING AND ECONOMIC DEVELOPMENT

INVESTMENT ACT OF 2015

***

     This act would impose an excise tax on all fossil fuels entering the state for the purpose

of funding a "clean energy fund."

     This act would take effect on January 1, 2016.

========

LC001285

========

LC001285 - Page 5 of 5